Hearings and Business Meetings

Sep272005

SD-366Energy Committee Hearing Room10:00 AM

Daniel Kane

Mr.

Statement of Daniel J. Kane,International Secretary-TreasurerUnited Mine Workers of Americabefore theCommittee on Energy and Natural ResourcesUnited States SenateRe-Authorizing theAbandoned Mine Lands ProgramSeptember 27, 2005Mr. Chairman, members of the Committee, I am Daniel J. Kane, International Secretary-Treasurer of the United Mine Workers of America (UMWA). The UMWA is a labor union thathas represented the interests of coal miners and other workers in the United States and Canadafor more than 115 years. We appreciate the opportunity to appear before the Committee todiscuss the Abandoned Mine Land Reclamation Fund (AML Fund) and its vital relationship tothe UMWA Health Funds. Representing people who live and work in the nation’s coal fields,the UMWA has a strong interest in both the reclamation of abandoned mine lands and thepreservation of health care for UMWA retirees who worked hard all their lives to provide thenation with energy. We strongly support the extension of the AML program in a way thataccomplishes both these goals.The UMWA supports the goals of the Surface Mining Act and the Abandoned MineLands program. When enacting the Surface Mining Control and Reclamation Act of 1977(SMCRA), Congress found that "surface and underground coal mining operations affectinterstate commerce, contribute to the economic well-being, security, and general welfare of theNation and should be conducted in an environmentally sound manner." That statement is as truetoday as it was in 1977. Coal mining contributes significantly to our national economy byproviding the fuel for over half of our nation's electricity generation. Coal miners are proud toplay their part in supplying our nation with domestically-produced, cost-effective, reliableenergy. We also live in the communities most affected by coal mining and support the intent ofCongress that coal mining must be conducted in an environmentally sound manner.2The AML program, financed by production fees levied on the coal industry, was designedto provide the means to reclaim lands that had been mined in previous years and abandonedbefore reclamation had been done. The law was amended in 1991 to permit the investment ofmonies held in the AML Fund to earn interest. In 1992, the Energy Policy Act extended theAML fees until 2004 and authorized the use of AML interest to pay for the cost of benefits forcertain eligible retirees under the Coal Act. Congress has further extended the authority of OSMto collect AML fees through June 2006.The UMWA believes that when Congress authorized the use of AML interest to financethe cost of health care for retired coal miner, it was a logical extension of the original intent ofCongress when the AML Fund was established. Congress joined these two programs togetherfor a specific reason–they both represent legacy costs of the coal industry that compelled anational response. When Congress created the AML Fund in 1977, it found that abandoned minelands imposed "social and economic costs on residents in nearby and adjoining areas." WhenCongress enacted the Coal Act in 1992, it also was attempting to avoid unacceptable social andeconomic costs associated with the loss of health benefits for retired coal miners and widows.The UMWA Combined Benefit Fund (CBF) was created by Congress to provide healthbenefits to retired coal miners and their widows. Today, the Combined Benefit Fund provideshealth benefits to nearly 37,000 elderly beneficiaries who reside in nearly every state in thenation. The average age of the CBF beneficiary population is about 80 years, about two-thirds ofthem are widows and their total estimated annual health cost is about $360 million. Congressintended for the financial mechanisms it put in place to provide self-sustaining financing of thecost of those benefits. However, rapidly rising health costs, a series of adverse court decisions,bankruptcies of major contributing employers (particularly in the steel industry), and low interestearnings at the AML Fund have eroded those financing mechanisms and placed the CBF infinancial jeopardy.Bankruptcies in the coal and steel industries have also added thousands of new orphanretirees to the UMWA 1992 Benefit Fund and the UMWA 1993 Benefit Fund, placing seriousstrains on the financial operations of those two plans. For example, the bankruptcy of Bethlehem3Steel in 2003 added nearly 4,000 new beneficiaries to the 1992 and 1993 Funds. Last year’sbankruptcy of Horizon Natural Resources added about 1,500 new beneficiaries to the UMWA1992 Fund and about 2,200 new beneficiaries to the UMWA 1993 Fund. These twobankruptcies alone added about 7,000 beneficiaries to the 1992 and 1993 Funds, more than 35%of the total population of the two funds. These continuing financial difficulties highlight theneed for Congress to enact Coal Act reforms as part of its AML re-authorization.Congress has intervened three times since 1999 to shore up the financial condition of theCBF through emergency appropriations of interest money from the AML Fund. In December1999, Congress provided $68 million to cover shortfalls in CBF premiums. In October 2000,Congress appropriated up to $96.8 million to cover deficits in the CBF’s net assets throughAugust 31, 2001. And most recently, in January 2003, Congress appropriated $34 million fromthe AML interest account to the Combined Benefit Fund. In addition, the UMWA Funds and theCenter for Medicare and Medicaid Services (CMS) expanded their existing nationwide, risksharingMedicare Demonstration project in January 2001 to include a new prescription drugcomponent. That project was scheduled to run until mid-2004, and to reimburse the Funds for27% of its Medicare prescription drug expenditures. It is a pilot project designed to demonstratethe efficacy of providing prescription drugs under Medicare, a timely project that we believe willprove useful to CMS and Congress as prescription drug coverage expands to the Medicarepopulation.With bi-partisan support from members of Congress, CMS announced an extension of theprescription drug demonstration program in early 2004 that extended the program untilSeptember 30, 2005. I am pleased to report that Secretary Michael Leavitt recently announced afurther extension of the prescription drug demonstration until September 30, 2007. Thisdemonstration extension is certainly welcome news; however, is does not alter the fact that thereis a pressing need for a long-term solution to the financial problems of the UMWA health carefunds.The need for a long-term solution for the financial problems of the UMWA health carefunds coincides with the need to re-authorize the AML Fund. We believe the re-authorization4effort can, and should, meet four broad policy objectives:• Provide sufficient duration and level of tax to fund the reclamation needs;• Focus on Priority 1 and 2 public health and safety projects;• Resolve the long-standing dispute between states and OSM over the state share ofcollections; and,• Provide long-term financial solvency for the UMWA health care funds.Mr. Chairman, opponents periodically allege that the benefits provided by the UMWAFunds are too generous and should be cut. While the costs to the beneficiary tend to be lowerthan some plans, the benefits are not substantially more generous than other plans in comparableindustries. The GAO compared the UMWA Funds benefits to retiree plans in manufacturingcovering union and salaried retirees in 2002 and found that “many features of the Fund’s healthplans are similar to those offered in the comparison plans. In particular, the Funds’ coveragefor hospital and physician services, which account for the majority of health care spending, iscomparable to the coverage provided by the other plans.”Everyone should keep in mind that these retirees have made significant financialcontributions to their health care, to the tune of $210 million that was transferred from theirpension plan pursuant to the Coal Act. In addition over the years, miners traded lower wages andlower pensions for the promise of retiree health care. The average pension for a 1950 pensioneris $375 per month and their widows receive $155 per month in pension benefits. For the 1974Plan retirees, the average pension is $532 per month while the average surviving spouse benefitis $373 per month. Thus, they do not have the financial ability to bear the kinds of co-paymentsthat some retirees pay. To renege on the historic bargain they made over many decades to acceptlower wages and pensions for this health care package would be a cruel and crushing economicblow.5In addition, this is an aged, fragile population that is sicker than the average Medicarepopulation. A study performed by Mercer Human Resources Consulting found this population tohave a 35% greater burden of illness compared to the Medicare population. Cutting the level ofbenefits for a population such as this would be a cruel response to the continuing financial crisis.Two bills have been introduced in the Senate dealing with AML reauthorization–S. 961by Senator Rockefeller and S. 1701 by Senator Thomas. Both bills would extend the AML feecollection (through 2019 and 2016, respectively) and provide continued AML interest transfers tothe Combined Benefit Fund. Recognizing the growing orphan problem, S. 961 would alsopermit transfers to support orphan retirees in the 1992 and 1993 plans. While we appreciate boththese efforts, we must recognize that they do not represent the long term financial solution thatmany have called for. In order to come up with a long term solution, the UMWA has beenworking with a coalition of Coal Act/AML stakeholders to devise legislation that is a modifiedversion of S. 961 that would satisfy the needs of all parties, including the “reachback” companiesand the “final judgment” companies. Representatives Cubin and Rahall made an effort to attachthe legislation to the Energy bill during the House-Senate Energy Conference, but the effortfailed partly because of confusion about the AML provisions of the bill. Since that time, many ofthose who opposed that effort are now supporting the coalition effort. The proposed legislation,known as the Cubin-Peterson-Rahall compromise, would:1) Extend the AML program for 15 years and reduce the fees from 35¢ to 28¢ per ton forsurface mined coal, from 15¢ to 12¢ for underground coal and from 10¢ to 8¢ per ton for lignite.States will automatically receive their share of AML funding on an ongoing basis.2) Provide that the unallocated federal share of moneys that are paid to the U. S. Treasuryunder the Mineral Leasing Act after date of enactment shall be used to make payments to statesand tribes of their unappropriated balance of state share collections.3) Amend SMCRA to provide for annual transfers of AML Fund interest (includingstranded interest and unappropriated RAMP funds) each year to the CBF, 1992, and 1993 Fundsto pay health benefits of orphan beneficiaries and cover any deficits.64) Provide that transfers to the 1993 Plan are limited to the cost of providing benefits toorphan beneficiaries as of December 31, 2005.5) Beginning in January 1, 2006 sufficient federal on-shore mineral leasing and royaltyrevenues will be used as needed to pay for:a. Health care costs of orphan retirees in CBF, 1992 and 1993 Funds.b. Health care costs of CBF retirees attributable to the “reachback” companies.c. Payment to “Final Judgment” companies equal to unreimbursed premiums (plusinterest) paid to the Combined Benefit Fund.To the extent such proceeds are insufficient, ongoing orphan obligations will be met fromgeneral funds as a mandatory appropriation.6) Modify SMCRA allocation formulas to provide that states with higher reclamationobligations such as Pennsylvania, Kentucky and West Virginia, receive higher allocations.7) Provide that “minimum program” states will receive $3.0 million per year.This legislation has garnered support from the various stakeholders in the AML/retireehealth care debate. It is a carefully crafted compromise and we believe it is worthy of supportfrom this committee.GAO StudyIn 2002, the U.S. Government Accountability Office (GAO) issued a report on the CoalAct entitled “Retired Coal Miners’ Health Benefit Funds: Financial Challenges Continue.”While the report was issued three years ago, its conclusions are still pertinent today. Among the7findings of the GAO were that:• the Combined Benefit Fund faces continuing financial challenges which havebeen exacerbated by various adverse court decisions that have reduced the perbeneficiary premiums paid to the CBF and relieved some companies ofresponsibility for paying for their beneficiaries;• CBF beneficiaries traded lower pensions over the years for the promise of theirhealth benefits and have engaged in considerable cost sharing by contributing$210 million of their pension assets to help finance the CBF;• the benefits provided to Coal Act beneficiaries are generally comparable tocoverage provided by major manufacturing companies and companies withunionized work forces;• CBF beneficiaries tend to be sicker, and therefore use more health care, than theaverage Medicare population; and• the CBF trustees have adopted numerous managed care initiatives and have ahistory of achieving savings against their Medicare targets in demonstrationprojects, thus saving money not only for the Funds but for Medicare and the U.S.Treasury.The GAO report clearly supports the positions the UMWA has advocated beforeCongress and the need for additional legislation. A promise made in the White House in 1946was subsequently reaffirmed in 1992. Congress intended the Coal Act to be self-sustaining andself-financing, but various court decisions have eroded that financing. There is no question thatthis is an elderly, frail population that is sicker than the general Medicare population anddeserves the benefits they were promised. There is also no question that the Funds haveaggressively managed the benefit plans and instituted state-of-the-art managed care programs thataim to improve the quality of care and reduce costs. Unfortunately, there is also no question that8the nation’s promise to retired coal miners will be violated if we do not enact a long-termfinancial solution to the coal industry retiree health care funding crisis.This is a unique population and a unique situation. We are unaware of any other instancein which a major industry-wide health and welfare plan in the private sector was created in acontract between the federal government and the workers. All three branches of our governmenthave played substantial roles in creating, shaping and determining the fate of the UMWA Funds.The Government Accountability Office clearly laid out the financial difficulties facing the Fundsand more recent actuarial projections show that Congress must act in order to shore up thefinancial structure. Again, we encourage members of Congress to enact legislation modeled onthe coalition bill crafted by Representatives Cubin, Rahall and Peterson.The UMWA Health and Retirement Funds and the U.S. GovernmentThe UMWA Health and Retirement Funds (the Funds) was created in 1946 in a contractbetween the United Mine Workers of America and the federal government during a time ofgovernment seizure of the mines. The contract was signed in the White House with PresidentHarry Truman witnessing the historic occasion.The UMWA first began proposing a health and welfare fund for coal miners in the late-1930s but met strident opposition from the coal industry. During World War II, the federalgovernment urged the union to postpone its demands to ensure coal production for the war effort.When the National Bituminous Wage Conference convened in early 1946, immediatelyfollowing the end of the war, a health and welfare fund for miners was the union's top priority.The operators rejected the proposal and miners walked off the job on April 1, 1946. Negotiationsunder the auspices of the U.S. Department of Labor continued sporadically through April. OnMay 10, 1946, President Truman summoned John L. Lewis and the operators to the WhiteHouse. The stalemate appeared to break when the White House announced an agreement inprinciple on a health and welfare fund.Despite the White House announcement, the coal operators still refused to agree to the9creation of a medical fund. Another conference at the White House failed to forge an agreementand the negotiations again collapsed. Faced with the prospect of a long strike that could hamperpost-war economic recovery, President Truman issued an Executive Order directing the Secretaryof the Interior to take possession of all bituminous coal mines in the United States and tonegotiate with the union "appropriate changes in the terms and conditions of employment."Secretary of the Interior Julius Krug seized the mines the next day. Negotiations betweenrepresentatives of the UMWA and the federal government continued, first at the InteriorDepartment and then at the White House, with President Truman participating in severalconferences.After a week of negotiations, the historic Krug-Lewis agreement was announced and thestrike ended. It created a welfare and retirement fund to make payments to miners and theirdependents and survivors in cases of sickness, permanent disability, death or retirement, andother welfare purposes determined by the trustees. The fund was to be managed by threetrustees, one to be appointed by the federal government, one by the UMWA and the third to bechosen by the other two. Financing for the new fund was to be derived from a royalty of 5 centsper ton of coal produced.The Krug-Lewis agreement also created a separate medical and hospital fund to bemanaged by trustees appointed by the UMWA. The purpose of the fund was to provide formedical, hospital, and related services for the miners and their dependents. The Krug-Lewisagreement also committed the federal government to undertake "a comprehensive survey andstudy of the hospital and medical facilities, medical treatment, sanitary and housing conditions incoal mining areas." The expressed purpose was to determine what improvements were necessaryto bring coal field communities in conformity with "recognized American standards."To conduct the study, the Secretary chose Rear Admiral Joel T. Boone of the U.S. NavyMedical Corps. Government medical specialists spent nearly a year exploring the existingmedical care system in the nation's coal fields. Their report, "A Medical Survey of theBituminous Coal Industry," found that in coal field communities, "provisions range fromexcellent, on a par with America's most progressive communities, to very poor, their tolerance a10disgrace to a nation to which the world looks for pattern and guidance." The survey teamdiscovered that "three-fourths of the hospitals are inadequate with regard to one or more of thefollowing: surgical rooms, delivery rooms, labor rooms, nurseries and x-ray facilities." The studyconcluded that "the present practice of medicine in the coal fields on a contract basis cannot besupported. They are synonymous with many abuses. They are undesirable and in many instancesdeplorable."Thus the Boone report not only confirmed earlier reports of conditions in the coal miningcommunities, but also established a strong federal government interest in correctinglong-standing inadequacies in medical care delivery. Perhaps most important, it provided a roadmap for the newly created UMWA Fund to begin the process of reform.The Funds established ten regional offices throughout the coal fields with the direction tomake arrangements with local doctors and hospitals for the provision of "the highest standard ofmedical service at the lowest possible cost." One of the first programs initiated by the Funds wasa rehabilitation program for severely disabled miners. Under this program, more than 1,200severely disabled miners were rehabilitated. The Funds searched the coal fields to locatedisabled miners and sent them to the finest rehabilitation centers in the United States. At thosecenters, they received the best treatment that modern medicine and surgery had to offer, includingartificial limbs and extensive physical therapy to teach them how to walk again. After a period ofphysical restoration, the miners received occupational therapy so they could provide for theirfamilies.The Funds also made great strides in improving overall medical care in coal miningcommunities, especially in Appalachia where the greatest inadequacies existed. Recognizing theneed for modern hospital and clinic facilities, the Funds constructed ten hospitals in Kentucky,Virginia and West Virginia. The hospitals, known as Miners Memorial Hospitals, providedintern and residency programs and training for professional and practical nurses. Thus, becauseof the Funds, young doctors were drawn to areas of the country that were sorely lacking inmedical professionals. A 1978 Presidential Coal Commission found that medical care in the coalfield communities had greatly improved, not only for miners but for the entire community, as a11result of the UMWA Funds. "Conditions since the Boone Report have changed dramatically,largely because of the miners and their Union--but also because of the Federal Government,State, and coal companies." The Commission concluded that "both union and non-union minershave gained better health care from the systems developed for the UMWA."The Coal CommissionIn the 1980s, medical benefits for retired miners became a sorely disputed issue betweenlabor and management, as companies sought to avoid their obligations to retirees and dump thoseobligations onto the UMWA Funds, thereby shifting their costs to other signatory employers.Courts had issued conflicting decisions in the 1980s, holding that retiree health benefits wereindeed benefits for life, but allowing individual employers to evade the obligation to fund thosebenefits. The issue came to a critical impasse in 1989 during the UMWA-Pittston Companynegotiations. Pittston had refused to continue participation in the UMWA Funds, while the unioninsisted that Pittston had an obligation to the retirees.Once again the government intervened in a coal industry dispute over health benefits forminers. Secretary of Labor Elizabeth Dole appointed a special "super-mediator," Bill Usery, alsoa former Secretary of Labor. Ultimately the parties, with the assistance of Usery and SecretaryDole, came to an agreement. As part of that agreement, Secretary Dole announced the formationof an Advisory Commission on United Mine Workers of America Retiree Health Benefits, whichbecame known as the "Coal Commission." The commission, including representatives from thecoal industry, coal labor, the health insurance industry, the medical profession, academia, and thegovernment, made recommendations in 1990 to the Secretary and the Congress for acomprehensive resolution of the crisis facing the UMWA Funds. The recommendation wasbased on a simple, yet powerful, finding of the commission:"Retired miners have legitimate expectations of health care benefits for life; that was thepromise they received during their working lives, and that is how they planned theirretirement years. That commitment should be honored."12The underlying Coal Commission recommendation was that every company should payfor its own retirees. The Commission recommended that Congress enact federal legislation thatwould place a statutory obligation on current and former signatories to the National BituminousCoal Wage Agreement (NBCWA) to pay for the health care of their former employees. TheCommission recommended that mechanisms be enacted that would prevent employers from"dumping" their retiree health care obligations on the UMWA Funds. Finally, the Commissionurged Congress to provide an alternative means of financing the cost of "orphan retirees" whosecompanies no longer existed.The Coal ActRecognizing the crisis that was unfolding in the nation’s coal fields, Congress acted onthe Coal Commission's recommendations. The original bill introduced by Senator Rockefellersought to impose a statutory obligation on current and former signatories to pay for the cost oftheir retirees in the UMWA Funds, require them to maintain their individual employer plans forretired miners, and levy a small tax on all coal production to pay for the cost of orphan retirees.Although the bill was passed by both houses of Congress, it was vetoed as part of the TaxFairness and Economic Growth Act of 1992.In the legislative debate that followed, much of the underlying structure of the CoalCommission's recommendations was maintained, but there was strong opposition to a generalcoal tax to finance orphan retirees. A compromise was developed that would finance orphansthrough the use of interest on monies held in the Abandoned Mine Lands (AML) fund. Inaddition, the Union accepted a legislative compromise that included the transfer of $210 millionof pension assets from the UMWA 1950 Pension Plan. With these compromises in place, thelegislation was passed by Congress and signed into law by President Bush as part of the EnergyPolicy Act.Under the Coal Act, two new statutory funds were created--the UMWA CombinedBenefit Fund (CBF) and the UMWA 1992 Benefit Fund. The former UMWA 1950 and 1974Benefit Funds were merged into the Combined Fund, which was charged with providing health13care and death benefits to retirees who were receiving benefits from the UMWA 1950 and 1974Benefit Plans on or before July 20, 1992. The CBF was essentially closed to new beneficiaries.The Coal Act also mandated that employers who were maintaining employer benefit plans underUMWA contracts at the time of passage would be required to continue those plans under Section9711 of the Coal Act. Section 9711 was enacted to prevent future "dumping" of retiree healthcare obligations by companies that remain in business. To provide for future orphans not eligiblefor benefits from the CBF, Congress established the UMWA 1992 Benefit Fund to providehealth care to miners who retired prior to October 1, 1994 and whose employers are no longerproviding benefits under their 9711 plans.The CBF is financed by per-beneficiary premiums paid by employers with retirees in thefund. The premium is set by the Social Security Administration and is escalated each year by themedical component of the Consumer Price Index. Interest earned by the AML Fund is madeavailable to finance the cost of orphan retirees. The remainder of CBF income derives fromMedicare capitation and risk sharing arrangements, DOL Black Lung payments, investmentincome and miscellaneous court settlements. The benefits for orphans covered by the UMWA1992 Fund are financed solely by operators that were signatory to the NBCWA of 1988.In passing the Coal Act, Congress recognized the legitimacy of the Coal Commission'sfinding that "retired miners are entitled to the health care benefits that were promised andguaranteed them." Congress specifically had three policy purposes in mind in passing the CoalAct:"(1) to remedy problems with the provision and funding of health care benefits withrespect to the beneficiaries of multiemployer benefit plans that provide health carebenefits to retirees in the coal industry;(2) to allow for sufficient operating assets for such plans; and(3) to provide for the continuation of a privately financed self-sufficient program for thedelivery of health care benefits to the beneficiaries of such plans.''14Without question, Congress intended that the Coal Act should provide "sufficientoperating assets" to ensure the continuation of health care to retired coal miners. However, thefinancial mechanisms have been eroded and have placed the Coal Act in continuing financialcrises.Recent Court DecisionsThe 2002 GAO study found that a number of court decisions have eroded the financialcondition of the Combined Fund–and the legal onslaught on the Coal Act continues. WhileCongress clearly intended that the Coal Act be financially self-sustaining, various court decisionshave undercut Congressional intent. A 1995 decision by a federal court in Alabama in NCA v.Chater overturned the premium determination by the Social Security Administration (SSA) andreduced the premium paid by employers by about 10%. Over time, the effect of this decision wasto remove hundreds of millions of dollars from the financing structure of the Coal Act. A 1999decision by the same court ordered the CBF to return about $40 million in contributions to theemployers, representing the difference between the original SSA premium rate actually paid andthe rate established in NCA. The trustees of the CBF filed suit against the Social SecurityAdministration in the District of Columbia in an attempt to set aside the NCA decision. In late-2002, the D.C. Court struck down the Social Security Administration’s nationwide application ofthe NCA decision and ordered SSA to report to the Court what premium rate should apply tocompanies not covered by the NCA decision. In June 2003, SSA notified the Court it wouldapply a higher premium to companies not covered by the earlier decision. However, while mostcompanies were paying the higher rate under protest, over 200 companies filed suit seeking tooverturn the higher rate. In August 2005, the United States District Court for the District ofMaryland issued a ruling in favor of the companies and enjoining the CBF from applying thehigher rate. If the CBF ultimately loses the premium rate case, it will have to reimburse theoperators for about $72 million in higher premiums that were collected prior to the court ruling.In 1998, the Supreme Court rendered a decision in Eastern Enterprises that struck downthe obligation to contribute to the CBF for companies that were signatory to earlier NBCWAs butdid not sign the 1974 or later contracts. Those employers were relieved of their contribution15obligations in the future and the Combined Fund returned millions of dollars in priorcontributions. Most of these retirees are now part of the unassigned beneficiary pool whosebenefits are funded from other sources. Since that time, a number of other companies whosigned the 1974 or later NBCWAs have also attempted to convince the courts that they, too,should be relieved of their responsibility. Most of these cases have now completed their appealsprocess, with the courts holding that the companies cannot walk away from their Coal Actobligations.The cumulative effect of these court decisions threatened a repetition of the problems andre-creation of the crisis of the 1980s that led to the creation of the Coal Act, meaning employershave been relieved of liability for their retirees and revenues have been significantly reducedfrom the employers that remain obligated. Compounding the revenue loss stemming from thesecourt decisions is the fact that the escalator used to adjust the premium for inflation (the medicalcomponent of the Consumer Price Index) is inadequate to measure the health care cost increasesin a closed group of aging beneficiaries who experience annual increases in utilization. Thecombination of escalating medical costs, loss of income, an increasing orphan population and aninadequate escalator have led to a continuing financial crisis for Coal Act beneficiaries.I mentioned earlier the bankruptcies of a number of steel companies that had retireescovered by the Coal Act. Recent bankruptcies at LTV, Bethlehem Steel and other steelcompanies have further reduced the premiums paid to the CBF, increased orphan costs for theAML fund, and added thousands of 9711 plan beneficiaries to the 1992 Plan. The Horizonbankruptcy in 2004 greatly increased the populations of the 1992 and 1993 Benefit Funds. Thegrowth in the orphan population has forced a dwindling number of employers to fund a growingburden of health care expenses for retirees who did not work for them. The magnitude of thesebankruptcies, which we believe that Congress did not anticipate when it passed the Coal Act, hasexacerbated the problems of the UMWA Funds and reinforce the call for a long-term solution.Now Is The Time For A Long-term SolutionMr. Chairman, there is a growing bi-partisan consensus that Congress needs to forge a16long-term solution to the coal industry retiree health care financial crisis. Over their workinglives, these retirees traded lower wages and pensions for the promise of retiree health care thatbegan in the White House in 1946. In 1992, they willingly contributed $210 million of theirpension money to ensure that the promise would be kept. Everything that this nation has askedof them–in war and in peace–they have done. They are part of what has come to be called the“Greatest Generation” and deservedly so. They have certainly kept their end of the bargain thatwas struck with President Truman. But now they find that the promise they worked for anddepended on is in jeopardy of being broken. We must stand up and say that this promise will bekept.Mr. Chairman, we thank you for the opportunity to add our support to the effort to reauthorizethe AML program and to provide a long-term solution to the financial problems of theUMWA Funds. I would be happy to answer any questions you may have.